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Investing in property came under scrutiny in the wake of the 2008 economic recession; however real estate, historically speaking, has always been a long term sound investment. While it may not be wise to invest all your assets in property, it is still a highly attractive proposition for many with diversified portfolios of assets.
For expats living in Asia, investing in property back in their home countries has a host of potential financial benefits.
1. Capital growth
Property has a history of delivering real returns in terms of capital growth. Although the property market has struggled in some western countries in the wake of the global financial crisis, it still a sound long term investment.
2. Rental income
Earning an income from renting a property is a great benefit. Real estate yields in the UK have been consistently higher than fixed interest securities over the last 30 years and in the US, nearly 80% of real estate return was from income flows between 1977 and 2007. Rental income can be used to meet borrowing costs on property or provide an additional income.
3. Borrow for growth
Property is one of the few investments for which banks will lend. Try going into a bank and borrowing $250,000 to invest in shares and you are likely to be shown the door; however property loans are likely to receive a much more sympathetic hearing. Of course, figures have to add up and borrowers will be required to fund a deposit, but the fact remains that banks are still lending on property investments.
4. A solid asset
For many investors, property is a desirable investment because it is something they can see and touch. Investors feel more in control of property and their interest is also not solely dependent on the performance of fund managers or at the mercy of the ups and downs of stocks and other less tangible asset classes.
5. Tax benefits*
Depending on circumstances, there may be tax benefits to investing in property. In many cases, loan repayments and expenses tied to the running of the property are eligible for tax deductions. Even the depreciation of a property often qualifies as a tax deductible.
6. Good time to buy
Any good investor knows the maxim, ‘buy low, sell high’. Now is a good time to consider property prices. Many properties in mature markets are being offered at prices which offer great potential for future appreciation and real returns on the invested capital.
Investing in real estate in addition to other assets creates greater diversification in an investment portfolio. Holding other assets is a good hedge against the volatility of equities and other investment types.
8. Keeping a foot in the door
For expats living in Asia, investing in property back in their home country or region means that they keep a foot in the property door. If property prices rise dramatically while expats are posted overseas, it may be very difficult to get back into the market on their return home. Owning and renting a property means they remain tied to the market through a low risk asset.
If you are interested in looking at options for property investment in any country, get in touch for more information.
*Disclaimer: Infinity is not qualified to provide taxation advice and readers should always ensure they take appropriate professional taxation advice.